The Mexico Monitor will be a blog dedicated to all developments in Mexican law, politics, and business. For those who do not know, this is the second blog in the ‘monitor’ series – I also have been blogging at The Russia Monitor for nearly six years. So why add a blog on Mexico? There are several reasons Mexico is exciting:
- Economic Revival? – over the past decade, Mexico has enjoyed bouts of sub-par growth rates during boom cycles, and above-average contractions during bust cycles (compared to similarly-situated countries). Indeed, the country’s GDP growth rate has never cracked 6 percent over this time period, a feat accomplished by hemispheric neighbors Argentina, Brazil, Chile, and Peru. As for the 2008 financial crisis, Mexico’s lackluster recovery looks more like Russia’s than those of its neighbors. Still, there are many reasons to be optimistic about Mexico’s economy. First, and perhaps ironically, Mexico’s poor performance over the past decade has left it with an enormous amount of growth potential as compared, for example, to Brazil’s saturated market. Second, Mexico has just started to enter a demographic ‘sweet spot’, with strong population growth and a low proportion of old retirees to young workers (i.e., the inverse situation faced by countries such as the United States and Russia). And third, Mexico is ripe for a rapid rise in foreign direct investment (“FDI”) inflows – particularly from the United States – that have been abnormally subdued over the past few years. Last year, Chile surpassed Mexico for the first time as the second largest recipient of FDI inflows in the region (after Brazil). This could prove to be a temporary anomaly, however, as FDI inflows to Mexico resume their historical trend.
- Political Change? – Mexico is also interesting because of the prospect of political change and impending reforms. In fact, Mexico’s ability to capitalize on its potential for an economic revival to some extent depends on the success of these reforms. Last year, President Enrique Pena Nieto returned presidency to the Institutional Revolutionary Party (“PRI”) for the first time since the PRI lost the presidency in 2000 to Vicente Fox of the National Action Party (“PAN”). The PRI ruled Mexico for 71 years as a sort of quasi-authoritarian regime. If appearances are to be believed, Pena represents a “new and improved” flavor of PRI, while retaining some of the strengths developed by a party that has governed a country for the better part of a century. Pena began his first term with a flash, proposing a series of major reforms – collectively known as Pact for Mexico (Pacto por Mexico) – to which the three major parties agreed, and promising to take on entrenched interests. Not all are convinced that the reforms are either genuine or in the Mexican population’s best interests, but the prospect of a major shakeup and possible modernization to Mexico’s industries will be an interesting story to watch.
- Renewed Ties? – the U.S. – and particularly the Obama Administration – has been accused of ‘neglecting’ Latin America in recent years, a claim that is at least partially true. It seems that U.S. policymakers are now realizing that the vacuum created by a U.S. absence in the region can easily be filled by China. The second Obama term and new Pena administration could create a moment where the U.S. can recommit itself to Latin America generally, and Mexico in particular.
Mexico is interesting to watch at this moment in time because it is attempting to confront and reconcile all the issues described above – namely, making the transition to a dynamic, emerging, middle-income economy, engaging in governance while promoting democracy, and figuring out its position with respect to a conspicuous and at times neglectful neighbor to the north. Mexico faces major obstacles to these developments, including pervasive corruption, entrenched interests, and a festering – if overhyped – drug war.
The goal of this blog will be to provide unique and timely insights on how Mexico approaches these challenges. Joining me in this task will be my colleague – Gerardo Calderon-Villegas – a Mexican lawyer from Mexico City (temporarily located here with me in Washington, D.C.).